Question

An individual’s CO-Op is appraised at a value of $500,000 in 2019. The CO-OP was purchased in 2009 with a $450,000 mortgage payable monthly at an APR of 7% compounded monthly for 25 years. What is the equity in this CO-OP in 2019?

Answer 1

Use PMT function in EXCEL to find the monthly payment

=PMT(rate,nper,pv,fv,type)

rate=7%/12=0.58333%

nper=25 years*12=300 months

pv=450000

fv=0

=PMT(0.58333%,300,-450000,0,0)=$3180.51

==> We have to find the debt outstanding after 10 years from 2009 to 2019. 15 years left.

nper=15 years*12=180 months

=PV(rate,nper,pmt,fv,type)

=PV(0.58333%,180,3180.51,0,0)=$353,850.28

The equity value=market price of mortage-debt outstanding=$500,000-$353,850.28=$146,149.72